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The truths they don't want you to read....

Sunday, September 07, 2008

Tax rich at higher rate, says TUC

I'm with the TUC on this one, as it is about time that someone advocated proper redistributionist taxation policies.

The supposed virtue placed on unearned income - dividends and interest - is based on the false Thatcherite notion that the recipient has worked hard all their lives and deserves to pay less tax.

Mrs Tina Green, a long time resident of Monte Carlo, demonstrates that this is not the case, and that the majority of the beneficiaries are middle-earners and above who run their own businesses.

If you receive £1m in dividends you pay an effective tax rate of just under 25% on the whole amount (unless you live outside the UK, when it become zero) and if it is your own company, you can arrange not draw a salary hence not facing any PAYE or National Insurance.

While everyone else has no option but to pay 31% (or 41%) of their salary.

Labour's insane infatuation with the mega-rich, and the premise that they must be good for the economy, has resulted in a bidding war to give them everything they want in terms of tax relief, without expecting them to contribute financially (other than negligible sums) to the Treasury.

Meantime the pensioners - the ones who should benefit from the tax breaks on unearned income - are means tested on paltry sums received. To pay for the tax planning opportunities of the very wealthy.

(At this juncture, I must point out that unearned income will be ignored for Local Income Tax, meaning that with a modicum of planning, someone with their own company will pay no LIT. Hardly egalitarian!)

The debate on taxation - and the false premise behind it - needs to be reopened, for the sake of the poorest, and the need to ensure fair taxation is now more pressing than ever.

Will Labour again become the party of the less privileged, or will they continue to pander to the rich - at least until their bank overdraft is clear?

Cynicism tells me that the battle to schmooze with the wealthy will extend to all parties. Just watch which rich party funders benefit from each policy 'adjustment'.

2 comments:

Gary Sutherland said...

Get your facts right, please.

Company directors who choose to pay themselves by way of dividends instead of a salary still pay income tax, although they do not currently pay NI upon them.

Angus said...

Utter rubbish.

There is only a liability to tax if they become higher rate taxpayers. Below that limit the dividend is not liable to any further tax beyond the deemed 10% credit.

Even the Government agree with me!